The project was cancelled in 1991. It was meant to be some kind of a super Commodore 64, offering a C64 "compatibility" mode so that it could leverage on the existing base of already developed C64 software, plus a native mode making full use of the added hardware. The problem was that C64 software was heavily related to the hardware, so that even very little incompatibilities or slight differences in timing could break existing software (mostly video-timing-bound games). This is probably why the project was cancelled, and only a few development units are left of this strange computer.

Jope adds (and I agree with him): "Another reason why the C-65 was canned was, because the Amiga was becoming popular at the time and management saw that there was going to be overlaps in their product portfolio".